Amazon warehouse sells for $30 million

Amazon.com has delivered a big payday to one of its Chicago landlords.

The online retail giant is the largest tenant in a South Side warehouse that Venture One Real Estate sold for almost $30.3 million, according to Cook County property records.

That's nearly five times what Venture One and a partner paid in 2013 for the then-empty 277,523-square-foot building at 2801 S. Western Ave. Venture One and its partner, New York-based DRA Advisors, filled up the building with new tenants including Amazon, which leased about 150,000 square feet in the warehouse late last year.

Venture One and DRA, which paid $6.2 million for the property, sold it Dec. 14 to Chicago-based real estate investment firm Heitman, county records show.

Venture One Principal Matt Goode said the building is an example of the high interest, from tenants and investors, in warehouses in urban areas. Locations near large numbers of residents have become increasingly important for firms such as Amazon that make deliveries in as little as an hour, and for manufacturers or distributors looking for access to more potential employees, he said.

“We're seeing an increased demand, and there's a lack of supply in the city and in very close-in locations in the suburbs,” Goode said. “You're seeing interest from last-mile distribution, or companies that need to be close to that labor pool. In this case, you have both.”

VACANCY RATE

Goode declined to say how much the venture spent upgrading the property and filling it with tenants. A Heitman spokeswoman declined to comment on the acquisition.

Chicago-area industrial vacancy was below 7.3 percent in the second and third quarters of 2015, the lowest level since 2001.

Venture One was represented in the sale by Executive Director James Carpenter and Senior Director Michael Tenteris of Chicago-based Cushman & Wakefied.

The lease with Amazon filled up the South Side building. The other approximately 127,000 square feet had already been leased by Ridgefield, Conn.-based food distributor Chefs' Warehouse.

The South Side lease was just the second signed in Chicago by Amazon, which previously leased a smaller space on Goose Island on the North Side. That facility opened in July as a Prime Now Hub, offering one-hour delivery to customers. Last year Amazon also confirmed plans for 1,000 full-time employees at a larger Joliet warehouse, and it is believed to be considering additional Chicago-area locations in order to make ultra-fast deliveries.

An Amazon spokeswoman did not respond to a request for comment. Amazon moved into the South Side building in December, according to real estate data provider CoStar Group.

Amazon also plans to open a Chicago office at 227 W. Monroe St., part of the two-tower office property known as the Franklin.